Question

A firm increases its dividend plowback ratio. All else equal you know that _____________.A. earnings growth will increase and the stock's P/E will increaseB. earnings growth will decrease and the stock's P/E will increaseC. earnings growth will increase and the stock's P/E will decreaseD. earnings growth will increase and the stock's P/E may or may not increase

Answer 1

A firm increases its dividend plowback ratio. All else equal you know that _____________.A. earnings growth will increase and the stock's P/E will increaseB. earnings growth will decrease and the stock's P/E will increaseC. earnings growth will increase and the stock's P/E will decreaseD. earnings growth will increase and the stock's P/E may or may not increase

Answer 2

D. earnings growth will increase and the stock's P/E may or may not increase.

Step-by-step explanation:

A firm increases its dividend plowback ratio. All else equal you know that earnings growth will increase and the stock's P/E may or may not increase.